LPR quotation in September "Stands in place"

Yesterday, the People's Bank of China authorized the National Interbank Funding Center to announce that the loan market quoted interest rate (LPR) on September 20, 2023 was 3.45% for 1-year LPR and 4.2% for 5-year and above LPR, which is consistent with the previous quotation.

The LPR remained unchanged this month, in line with market expectations. On September 15, the central bank launched a 591 billion yuan MLF (medium-term lending facility) operation, with the operating interest rate remaining unchanged at 2.5%. The MLF operating interest rate remained unchanged in September, which means that the pricing basis of the LPR quotation in that month has not changed.

Zhou Maohua, a macro researcher at the Financial Market Department of Everbright Bank, believes that the LPR has remained stable this month, mainly due to the People's Bank of China's interest rate cuts and other early efforts, which are currently in the implementation and transmission process of financial institutions. Although LPR is "standing still" this month, according to market analysts, there is still the possibility of further downward adjustments in the future. Wang Qing, chief macro analyst of Oriental Jincheng, believes that the current policy space is relatively large. If further efforts are needed to stabilize growth and stabilize the property market in the future, there is still room for MLF interest rates to be lowered. Considering that domestic prices will continue to be at a low level in the coming period, which provides more favorable conditions for further lowering the policy interest rate, the possibility of another LPR lowering before the end of the year cannot be completely ruled out.

Zhou Maohua said that the next LPR adjustment will depend on the comprehensive performance of the financing needs of the domestic real economy, the pace of real estate recovery, and bank net interest margin pressure. Even if LPR remains stable, it will not affect the continued benefit of finance to the real economy. Relevant departments encourage and guide financial institutions to increase support for weak links in the real economy and key emerging areas.